Disability Insurance Paperwork

Non-Payment and Extending Credit: Ten Considerations for Contractors and Suppliers

 

  1. Your company is not a bank. You are not in the business of lending money over extended periods of time.

 

  1. Just because the general contractor has not been paid does not mean that you should not be paid (see item #1).

 

  1. Remember that you have other remedies besides a construction lien. Delivering a written notice of lien can be an effective way to stop the flow of funds on a project.  Likewise, a breach of trust claim can be a powerful tool.

 

  1. Agree upon credit terms in advance. Be consistent, clear and concise.  Obtain information about your customer by way of a credit application, including the correct legal name of the business, and current banking information.

 

  1. Do the Due! Conduct appropriate due diligence including: (a) credit searches; (b) reference checks; (c) property and corporate searches; (d) writ searches.

 

  1. Identify problems early. Warning signs to watch for include: (a) slow or non-payment; (b) N.S.F. cheques or post-dated cheques; (c) cheques coming from someone other than the customer; (d) re-structuring or presence of outside people such as an accountant or “consultant”.

 

  1. Get something in return. In exchange for revised credit terms, seek an acknowledgement and agreement on the amount of the outstanding debt, or additional security if necessary.

 

  1. Lawsuits are inevitable. Good procedures and record keeping reduce the cost of lawsuits and increase the likelihood of recovery in collections.  Consider whether your company has a clear mechanism for acknowledgement of receipt or pick-up of product.

 

  1. Know when to cut your losses. $100 today is worth more than the possibility of $125 two years from now.  Don’t be afraid to cut deals!

 

  1. As hard as it is to believe, general contractors and customers do occasionally lie about the cheque having been mailed out!